Contrarians weren’t surprised by gold’s huge plunge on Monday of this week, when the yellow metal at one point was down more than $100 an ounce.
To be sure, it would be going too far to give contrarians credit for predicting the plunge. But it is true that contrarians have been largely bearish since July, when gold market optimism reached hardly-ever-before-seen levels. So to that extent contrarians have been suspecting that any big surprises in the gold arena would be on the downside.
Even after Monday’s big drop, contrarians continue to look for lower prices.
These are the conclusions I draw after analyzing the average recommended gold market exposure level among a set of short-term gold market timers who my firm has been monitoring on a daily basis since 2000. (This average is the Hulbert Gold Newsletter Sentiment Index, or HGNSI.) Currently, this average stands at 31.7%, which is higher than 55% […]
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